Czech construction companies are in a difficult situation as inflation makes their costs higher while the number of development they could apply for is decreasing. To ensure enough work in the coming years, they began to approach prices, which are often already on the verge of profitability, as part of the competitive struggle – Reality Trend reports.
The analytical company CEEC Research, which conducts a survey of construction companies several times a year, also confirms this double-pressure situation. Based on their data business linked to the construction of apartments and offices are the most affected.
Two-thirds of construction companies admit they sometimes even violate their internal guidelines when getting a contract. Where there is higher pressure on prices, even dumping prices or non-standard delivery dates are sometimes offered, as the director of CEEC Research, Petr Ondrášek told Reality Trend.
Change to come by the end of the year
Construction companies in the Czech Republic still have plenty of work thanks to orders from previous years, which are now being built or completed.
By the end of the year, however, the situation may change rapidly. Economists predict a 2% drop in the Czech construction industry. Even the largest construction group Metrostav is preparing for a significant slowdown. “There is an obvious decrease in the private market, especially in residential and administrative construction, and this is subsequently reflected in the entire construction industry,” – said Metrostav spokesman Radim Mana.
Suspended projects
A significant part of developers in the Czech Republic started suspending their projects already at the end of last year. The reason is, first of all, the increase in interest rates, which makes the financing of projects more expensive, and thus the demand for new apartments has cooled significantly.
The trend is illustrated by the figures of the Czech Statistical Office from April. Production in civil engineering, i.e. in the construction of apartments, offices and other non-residential premises, decreased year-on-year by 5.3% as of the mentioned month.
